Broker Check

Market Recap (May 26 2020)

May 26, 2020
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Positive news returned to the market last Monday. This optimism, related to developments for a possible COVID-19 vaccine, pushed all the major indices significantly higher. The remainder of the week was mixed as markets struggled to hang on to most of Monday’s gains.
 
We’ve gotten a lot of questions regarding the apparent disconnect between current economic news that market returns. In other words, as we continue to receive bad news for the economy the markets seem to respond by moving higher. What accounts for this disconnect?
 
A recent article in Forbes outlined several reasons for this scenario. First off, keep in mind that economic data looks backwards (“what has already happened?”) while the markets look forward (“what will happen?”). Secondly, the markets hate uncertainty more than bad news. In other words, clarity – even bad – is better than ambiguity. 
 
Finally, this time really is different. The U.S. and nations around the globe have launched unprecedented fiscal stimulus programs to blunt the impact of our economic slowdown and aid in a recovery. 
 
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